Vikas (employedd) 21 October 2011

Central excise queries

Sir

I am confused at following transaction. Require your guidance.

Company A is a manufacturer who supplies Raw material to company B, also a manufacturer.
Company B sends some raw material to the jobworker’s premises directly from company A [Rule 4(5)(a)] and takes cenvat credit only after the material received in its premises after jobwork. This is to save the transportation cost. The jobwork process may/may not amounts to manufacture.

Now as some business strategy this arrangement is changed as under.
- Company A will supply raw material to company X “An Excise Registered Dealer”.
- Company “X” will then supply this material to company “B” on its Dealer Invoice.
This is basic and routine arrangement.

But how the material can go directly from company “A” to some jobworker and then sent to company “X” a registered dealer and then it can be finally supplied to company “B”.
Can “X”- the dealer, instruct “A” to put jobworker’s name & address as consignee and when material come after jobwork to “X”, he can enter it in its RG23D register and make invoice to company “B” ???
Is registered dealer allowed to send any material to jobworker for the process which does not amount to manufacture ??

Vikas Solanki

Reply Follow

6 Replies

prakash babu (Advocate/Tax Consultant) 22 October 2011

If the said registered dealer is authorised by the principal manufacturer to send the said raw materials to job worker for further processing and supply the same to company B is OK vide explanation below Rule 10 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.

Amitava Chatterjee (Superintendent Central Excise) 10 December 2012

the answer is no. a excise dealer is authorised only to issue cenvatable invoices on which credit can be taken. no other function is allocated to a dealer as per extant law.

Rajeev Kumar Garg ( Self Consultancy of Excise Customs and Service Tax) 27 December 2012

An excise registered dealer is not allowed to send their goods for job work whether it is amount to manufacture or not because he is registered for selleng their goods as it is and for passing cenvat credit to thier buyer. If job work is required by "B" on their purchased from "X" then "X" can send that goods to Job worker directly mentioning the name of job worker as consignee. If job work is required by "A" then he can directly send the processed goods to "X" from job worker's premises but in that case "A"must get a general permission from the Commissioner.

Rajeev Kumar Garg

Consultant (Excice, Customs & Service Tax)

Naresh (Accountant) 22 January 2013

I have doubt regarding query relating to whether the same machine can be used for manufacturing different retail selling prices packages since we are paying the duty on basis of compounded levy scheme. Whether we can use the same machine for producing the different packages of differerent retail selling prices and will pay the duty on single machine only. Please guide on the same.

Kamal Kumar (Manager) 11 September 2013

Sir,

I wish to state that we have a unit situated in Baddi, which is exempted from Central Excise duty under notification 49-50/2003, (Area based exemption), we didn’t have Central Excise Registration number, we wish to procure Raw material duty free and manufacture it into our factory and then we shall export the finished goods. The raw material is dutiable and we are not availing Cenvat credit being exempted unit.

How can we procure the goods duty free and under which notification ?

amitava chatterjee (Superintendent) 11 September 2013

First of all you are required to obtain Central Excise Registration to avail the benefits of Area Based Exemption. For the purpose of procuring duty free inputs you have to follow the provisions of Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001.

For any other critical points you have to contact me on mobile 9674110711.